Bulls Bounce Back For The Dow Jones Industrial Average

Technical analyst Dave Chojnacki of Street One Financial examines Thursday’s widespread rally that featured technology names leading the way, and updates the important technical levels to focus on as we head toward the end of the month.

Technical analyst Dave Chojnacki of Street One Financial examines Thursday’s widespread rally that featured technology names leading the way, and updates the important technical levels to focus on as we head toward the end of the month.

We got mixed economic reports to start the day on Wednesday, but investors had the new Tax Plan on their minds. Expecting a plan that will be favorable for equities, the indices gapped up at the open.

The beaten down Technology sector was getting lots of love early on. As leaks of the new Tax Plan hit investors, they pushed prices higher across the board. Techs remained strong and the NASDAQ 100 (NDX) was the strongest sector in the session, finishing with significant gains.

The Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) had moderate gains, with the SPX hitting a new intra-day high. At the close, the DJIA gained 0.25%, the SPX added 0.41%, and the NDX was up 0.96%.

Breadth was slightly positive, 1.33 to 1, on average volume. ROC(10)’s advanced, with the NDX continuing in negative territory. The DJIA and SPX remain in positive territory. RSI’s moved higher, with the DJIA the strongest at 65. The NDX ended 51.5 and SPX closed at 63.8. The NDX remains as the only major index with its MACD below signal.

The ARMS index ended the day at 0.85. a slightly bullish reading. The NDX was up for the second straight session, pushing above its 50D-SMA of 5911. During the session, it met resistance at its 20D-SMA of 5955. The NDX lower Bollinger Band® is now at 5880. The NDX remains just over 1% below its record closing high of 6004.

The DJIA closed at 22340, comfortably above its 20D-SMA of 22126. It is 82 points from its record closing high.

The SPX traded at a new intraday high of 2511. It could not hold that gain into the close and finished at 2507. Its 20D-SMA is now at 2487.

The iShares Russell 2000 (NYSE:IWM) continues to make new highs, ending yesterday at 147.44 and an intra-day high of 147.86. The VIX fell 2.9% to 9.87.

Near term support for the NDX is at 5925 and 5911. Near term resistance is at 5955 and 5975. Near term support for the SPX is at 2500 and 2490. Near term resistance is at 2508 and 2511.

Europe is mixed in early trade Thursday, while U.S. Futures are slightly lower in the premarket. Major economic reports on tap today include GDP numbers at 8:30am, International Trade at 8:30am, Jobless Claims at 8:30am, and EIA Natural Gas at 10:30am.

The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) fell $0.09 (-0.04%) in premarket trading Thursday. Year-to-date, DIA has gained 14.66%, versus a 12.90% rise in the benchmark S&P 500 index during the same period.

DIA currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #4 of 75 ETFs in the Large Cap Value ETFs category.